The National Bank of Egypt (NBE) has opened letters of credit to finance import operations for the bank’s clients worth $18.5bn during the period between 3 November 2016 and 5 December 2017, i.e. within 13 months, according to Yehia Aboul Fotouh, vice president of the bank.
Aboul Fotouh told Daily News Egypt that the bank managed to fund these operations after foreign exchange earnings increased significantly following the liberalisation of the exchange rate, noting that the total amount of foreign exchange earnings in the bank reached about $17bn since 3 November 2016 and until 5 December 2017.
In response to a question about the extent to which the bank may resort to launching foreign bonds to enhance the liquidity of foreign exchange, Aboul Fotouh said that it is a high possibility at any moment. The idea of receiving loans from abroad or making agreements with foreign banks to cover import operations and provide funds or loans is part of the bank’s everyday work. However, the bank is delaying the step of launching bonds until the conditions of global markets improve, as well as the conditions of the Egyptian economy, in order to launch bonds with a proper non-exaggerated return, added Aboul Fotouh.
NBE launched bonds worth $600m to the global markets in August 2010. The interest rate of these bonds was 5.25%.
In March 2015, the bank’s Extraordinary General Assembly approved the issuance of bonds in the global market.
According to a previous statement by Hisham Okasha, NBE chairperson, the bank was expected to issue these bonds in the first quarter of 2017, however, this has not happened yet.
Aboul Fotouh said that anyone who tracks the bonds recently issued by the government will find that the interest rate for the second launch was less than the first, which reflects the confidence international institutions have in the Egyptian economy, and is an indication that any Egyptian bonds that may be launched in the future would have a much lower interest rate.